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Here’s How Billionaire Jeff Bezos Makes Effective Decisions

Each decision whether big or small has an impact. Of course, nothing happens in isolation. With every decision comes a consequence. Thus, every decision matters. So, how do you make a good one?

According, Jeff Bezos, Billionaire, and CEO of Amazon, there are 4 things to consider when making a good business decision.

Here’s what he said in Amazons 2016 annual letter to shareholders:

  1. Never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process.
  2. Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
  3. Using the phrase “disagree and commit” will save you a lot of time. If you have a conflict on a particular direction, even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this, but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.
  4. Recognize true misalignment issues early and escalate them immediately. Teams sometimes have different objectives and fundamentally different views. They simply aren’t aligned — and no amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.

Conclusion

In essence, you must make a decision even without all the information. Having 90% or even 100% of the information you wish you had doesn’t really make a difference. You must decide quickly and tidy it up later.

Disagree and commit. When two parties are in conflict, accept the disagreement and commit to one resolution or the other. Arguing about it all day isn’t going to solve anything.

Don’t get stuck in one frame of mind. Each decision will require a different process.